Two decades after the end of central planning, we investigate the extent to which the advantages bequeathed by planning in terms of high investment in physical infrastructure and human capital compensated for the costs in allocative inefficiency and weak incentives for innovation. We assemble and analyse three separate types of evidence. First, we find that countries that were initially relatively poor prior to planning benefited more, as measured by long-run GDP per capita levels, from infrastructure and human capital than they suffered from weak market incentives. For initially relatively rich countries the opposite is true. Second, using various measures of physical stocks of infrastructure and human capital we show that at the end of planning, formerly planned countries had substantially different endowments from their contemporaneous market economy counterparts. However, these differences were much more important for poor than for rich countries. Finally, we use firm-level data to measure the cost of a wide range of constraints on firm performance, and we show that after more than a decade of transition in 2002-05, poor ex-planned economies differ much more from their market counterparts, in respect to both good and bad aspects of the planning legacy, than do relatively rich ones. However, the persistent beneficial legacy effects disappeared under the pressure of strong growth in the formerly planned economies in the run-up to the global financial crisis.

This book examines the implementation of competition policy during the 1990s in Hungary, Poland, and the Czech and Slovak Republics. It looks at the economic predicament of countries in transition, considering how far this has required the state to actively police the competitive process. It assesses the extent to which initial economic and political conditions have constrained the involvement of the state in such activity. It then analyzes the statutes of the countries and the structure of the institutions established to implement competition policy. A comprehensive discussion of the case law and the experience of policy in practice is used to suggest lessons for the task of competition policy, both in these countries and in others undergoing the transition from central planning. This book will be valuable not just for those interested in competition policy but for all students of the political economy of transition.